I thought I’d heard them all. Atari stories, that is. I started covering the company in 1981, followed company founder Nolan Bushnell and first engineer Al Alcorn through their other adventures, became personal friends with more than a few Atari alumni, and even had a memorable lunch with Warner COO Manny Gerard after that company bought Atari (and, many say, then destroyed it).

But last Thursday evening, at a sold-out 100-person event hosted by the IEEE Silicon Valley History Committee, a few behind the scenes stories came out that were new to me—and even new to some of the people who were key players at Atari at the time. It’s hard to get startups off the ground, particularly those trying to do something as revolutionary as start a videogame—or personal computer—industry. So let’s just say the truth, at times, was stretched—or simply ignored—in order to make things happen. A few examples:

Motivating an engineer with a fictitious client:

Pong has gone down in history as the first consumer video game. In 1972, shortly after Atari’s inception, Atari founder Nolan Bushnell saw a demo of what became the Magnavox Odyssey; it included a ping pong game. “I thought the game was crap,” Bushnell recalls. “It was fuzzy, analog. Our tech was better.”

Bushnell said he’d contracted with pinball manufacturer Bally to build a driving game. But he recalls that as he drove home from the demo, he thought his one engineer, Al Alcorn “doesn’t know jack shit about video. I felt that [the driving game] was too hard as a learning project, so I told Al to do this ping pong game.”

“You told me you had a contract with General Electric [to build] a home game…the fact that nobody from GE came by, or wrote us a letter, well, I was 24, I didn’t know better.”
—Al Alcorn

Alcorn jumped in to continue the story. “And you told me you had a contract with General Electric, [to build] a home game, so I thought wow, this is going to be hard to do, the fact that nobody from GE came by, or wrote us a letter, well, I was 24, I didn’t know better.”

“I just wanted you to be motivated,” Bushnell said.

Faking out the market:

“I wanted world domination,” says Bushnell. “And it turns out that there are two coin-op [game] distributors in every city. One would have Gottlieb pinballs, one Williams. We had chosen the best distributors, but the [distributors] who didn’t have the Atari brand were doing everything they could to spawn a competitor. So I thought, let’s make that happen.”

So Atari secretly started a second company, Kee Games, with Bushnell’s next door neighbor, Joe Keenan, at the helm. “We took our number two engineer, our number two manufacturing guy, and every other game in our lineup, and gave it to Kee. We started Kee Games in August, and they were up and spinning by the November AMOA show (the big trade show in the games industry). Their goal was to pick up the rest of the distributors.”

Continued Alcorn: “We told the distributors that those bastards are stealing our games, and then the distributors would run off and grab the games. We would rag at our distributors’ meetings about [Kee] stealing our games—and stealing our employees no less.”

“I knew that I couldn’t keep it a secret forever,” Bushnell said. “So I started rumor that they had stolen a bunch of stuff and we were suing. Then I put it out that we had settled. Then I said we settled for some shares. Then eventually I said a lot of their shares, then I said we decided to buy the rest of the shares and merge companies.”

Managing a Meddling Boss:

“Nolan [Bushnell] and I had a vibrant, contentious, relationship,” said Alcorn. “Nolan is this dreamer doing all this crazy stuff, and I’m the one who gets the short end of the stick and has to make it happen.”

“Nolan would come into engineering,” Alcorn continued, “where we had three teams who had been working on things for months. And he would say, ‘This game is shit, let’s do this instead.’ That got to be a problem, so I gave our secretary a pager only to be used to page me in the event Nolan got into engineering. I would go in and stand behind him and as soon as he left I would remind engineers who they worked for.”

Owen Rubin, an engineer in the Atari coin-op division hired in 1976 to help with the transition from TTL to microprocessor-based hardware, said later engineers turned to a different technology to stop marketing folks from messing with engineering. “We called it the Gene Lipkin switch,” Rubin says [Lipkin was an Atari vice president of marketing and later president of the coin-op division]. “We we put a button under the lab benches that would crash the game when he came in, and we would say, ‘Oh, it’s not working.’”

Estimating manufacturing capacity:

The first major customer for home Pong was Sears. Says Bushnell, “We were in conference room with Tom Quinn [the Sears executive], and he says, ‘How many can you build?’ We had no clue. A big run for us at the time was 10,000 units. So I went out and asked our manufacturing guy, he said 25,000. Then I went back to Quinn and told him 75,000. He gave us an order for 150,000.

Faking a trade show demo:

When introducing the home Pong game system at Toy Fair, Bushnell says, “We had a wooden mockup. We bolted it to a table, and had wires come through holes in the table to a box of the electronics stuff under it.”

More trade show shenanigans:

Atari, obviously, wasn’t the only one playing deception games.

Chuck Peddle, designer of the MOS Technology 6502 microprocessor, told his trade show story from the audience.

“We were selling 6502 [microprocessors] from a big jar, but the only working ones were at the top of the jar.”
—Chuck Peddle

“We went to Wescon [in 1975],” said Peddle. “We had advertised in a local tech mag that we would sell a $25 computer on the floor, but we got to the show and they said you can’t sell on the floor. So I got a suite. Steve Jobs, Joe Decuir, and other people, came to the suite, bought 6502s from my wife. We were selling them from a big jar, but the only working ones were at the top of the jar.”

Blocking the competition:

After Warner acquired Atari, Bushnell stayed with the company for a little over a year. “I thought we needed to immediately start working on the VCS-2, which Warner didn’t want to hear about. But I went to General Instruments, TI, and others and said, ‘Would you design the next version of the Atari VCS?’ My objective was to tie up every MOS design capability out there. After I left, Ray [Kassar] was looking at progress payments; they were like $25,000 a year, that was nothing to act as a blocker. But he stopped them. So that freed a TI chip, a GI chip and created the Mattel competition, the Bally competition. That decision allowed in one season a whole bunch of competition.”

Passing the ball and tricking engineers:

“I’m sure [Steve] Jobs learned a lot watching Nolan and me fight. Nolan would never take no from an engineer.”
—Al Alcorn

“I’m sure [Steve] Jobs learned a lot watching Nolan and me fight,” said Alcorn; “Nolan would never take no from an engineer.”

“I gamed Al,” recalled Bushnell. “Whenever he said ‘I can’t do that,’ I said ‘I’ll get someone who can.’

“So he got Jobs to do Breakout,” said Alcorn. “Jobs wasn’t even an engineer. We didn’t know he was going to get Woz to do it at night, but a week later there it was, working, like magic. It had like 20 chips. But Nolan hadn’t said make it with chips we could buy, and they were HP chips [that we couldn’t]. We later had to have a normal engineer redesign it with 100 chips.”

“I knew that Jobs was going to get Woz to do it,” said Bushnell. “I looked at it as hiring two Steves for the price of one.”

“I also knew that Woz was going to do it,” chimed in Chuck Peddle, “because they were already talking to us about helping to fund their company.”

Cleaning out an office after a layoff:

“When the big breakup took place,” says Rubin, “[Jack] Tramiel [who purchased the consumer division of Atari from Warner in 1984] went around to fire people. He fired security first, so [the rest of the] people were walking out with televisions, and scopes, and games. We found a giant safe, and got it opened with a combination taped under someone’s desk. It was the master set for all the ROMs of all the Atari games. I called Tramiel and said ‘I have your master set.’ He thought it was a crank call.”